Rio Tinto's biggest iron ore mine just got bigger. Under a deal with the WA Government, Rio will splurge $1.8 billion on an upgrade of its Yandicoogina mine in the East Pilbara.

Part of the mining giant's push to produce 353 million tonnes of ore in WA by the first half of 2015, the Yandi expansion will increase production at the mine from about 53mt a year to a peak of 60mtpa and extend the asset's operating life "well into the 2020s".

Yandi is so big that it is one of the few mines with iron ore marketed under its own name, a contrast to the industry-wide practice of blending different ore types and qualities from smaller operations.

The expansion, which will replace depleted pockets of the site, also ensures Rio retains bragging rights over its Hope Downs joint venture partner Gina Rinehart, who is rushing to build her own 55mtpa mine at Roy Hill.

Premier Colin Barnett said the investment demonstrated the resilience of WA's mining industry.

"The iron ore industry will remain a major driver of investment and employment in WA into the future," the Premier said in a statement.

"As well as creating hundreds of construction jobs, this proposal will add eight years to the life of the Yandicoogina project, providing continued employment for about 1000 people. It will also . . . add to the state's royalty income."

The royalty boost will more than offset some of the hit the State's coffers took on Monday when Mr Barnett announced he would back a royalty exemption for WA's magnetite producers.

The move was partly designed to calm aggrieved Chinese mining companies that are angry their expensive WA investments are yet to show a return while being hit by the carbon tax and slow infrastructure developments, including Oakajee port.